Market Report 3/3/2020
Vincenzo Francis Castle is CEO of Castle Bank.
So the last week brought a downfall for the global stock exchange, as the Coronavirus managed to start a panic at the markets.Feb 21st started with a slow decline of DIJ, NASDAQ S&P500 and FTSE 100. Through the whole trading week, all the biggest indexes noted losses, finishing Friday. The Dow Jones Industrial Average DJIA -1.39% shed 357.28 points, to settle at 25,409.39 or 1.4% while S&P500 dropped 25.54 points SPX-0.82% to end at 2,954.22. Only a slight winner at Friday evening was Nasdaq Composite Index, gained less than a point to finish at 8,567.37
All three indexes fell into correction, defined as a drop below 10% but no more than 20% from a recent peak as the virus rattled investors, leaving global market in a unpleasant situation as the marked faced a bear. "We are now past a mere 10% technical correction and seem to be heading toward bear market" said Michael Every, senior strategist for Rabobank, in a Friday note.
On Monday, European markets rose on hope that central banks will deliver interest - rate cuts to stop the downfall of indexes.
At Friday closure of markets, Federal Reserve Chairman Jerome Powell stated that FED is willing to act accordingly to help the US economy.
2nd of March U.S stocks opened higher on Monday, after markets recorded the worst trading week since 2008. DJI risen 3.1% up to 26,183.79, S&P500 2.9% and Nasdaq also added 2.9% at the end of the trading day. Also a good day for British FTSE100, finished with 6,654.89
3rd of March ended with a rapid response toward FED annoucment of lowering the interest rate by .5%, leaving the U.S markets in a slight panic state. DJIA finished at 25,917.41 or -2.94%, S&P 500 3,003.37 or -2.81% and NASDAQ Composite Index 8,684.09 or 2.99%. The announcement from FED stroke like a lightning bolt and only one component of DJIA made a profit, Coca Cola Co. with a 0.25% gain.
The events of past few days are sending a bad signal to the markets as a virus outbreak can easily trigger a downfall, similar to the one from 2008 and also the reassurance from FED was more like someone saying " Hey get ready for worse".
The overall few trading days are something to be looked at as the markets may slide into bear trap, making investors sell the stocks in a rush, fuelling speculation on the markets and leaving some of the investments at a high risk.